US Video Game Sales Plunge 23% in May: NPD

U.S. sales of video games dived 23 percent to $863 million in May, research group NPD said on Thursday, dipping below the $1 billion threshold for the first time since August 2007 as consumer spending weakened and hardware makers waged a price war.

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In the year to May, video games sales -- considered by NPD to include hardware, software, and accessories -- slipped 7 percent from a year earlier to $6.1 billion.

Among makers of gaming hardware, Nintendo again led the pack with 633,500 of its "DS" portable gaming devices and 289,500 of its Wii platforms sold, dwarfing the 175,000 Microsoft Xbox units that moved in May.

"May is typically one of the lowest revenue-generating months in any given year for the industry in general," said NPD analyst Anita Frazier. "The dollar sales decline was exacerbated by a decline in average retail prices for almost all of the categories."

"This month's top 10 games sold 2.6 million units combined, whereas last year the top 10 sold 3.7 million units.  Again this illustrates how tough the comparisons are to last year."

The May figure also suffered from comparisons with a strong year-ago month, with smash-hit "Grand Theft Auto" and "Mario Kart" having just debuted in April.

Analysts think the video games sector will remain relatively resilient in an economic downturn, as cash-strapped consumers look for cheaper sources of entertainment at home.

Last month, Activision Blizzard posted better-than-expected quarterly results and raised its 2009 outlook for earnings per share, citing a strong pipeline of games.

Now, the $30 billion industry -- led by the likes of Electronic Arts , Activision and THQ -- hopes to focus in the rest of the year on developing mainly blockbuster titles while finding ways to slash costs.

After a wave of belt-tightening in the past year, including widespread job cuts, studio closings and title cancellations, many now adopt a strategy of diverting resources to only their most bankable franchises.

Executives see glimmers of hope in new audiences -- casual gamers, more women and teens.

"At E3, it was notable how many games were targeted to the tween-girl demographic, and this June will see a number of games introduced for girls as well," Frazier said.

"June comparisons are still likely to be tough, but the wide variety of new content could help reinvigorate things somewhat."

The top-selling game in May was "UFC 2009 Undisputed" by THQ on the Xbox, followed closely by the "Wii Fit" by Nintendo.

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